Skip to main content

tv   Bloomberg Daybreak Europe  Bloomberg  December 15, 2016 1:00am-2:31am EST

1:00 am
anna: better late than never. the fed raises rates, sending the dollar near a four-year high. officials now see three hikes in 2017. >> the economy has proven to be remarkably resilient, so it is a vote of confidence in the economy. takes centeron stage at the bank of england. rates are expected to change but what will the minutes till us about the road ahead? eu leaders meet in brussels today at the end of a traumatic year. refugees on the agenda, could 2017 be even worse?
1:01 am
anna: a very warm welcome to the program. this is our flagship europe show. let's talk about what we heard from the fed and what that has done to the dollar. the -- the dollar the big beneficiary from what we heard from the fed. how the changing expectations from the fed around interest rates in 2017 have pushed up the dollar index. the rate went up 2.75 percent as expected at the fed. the fed also signaling that the economy is strong and will improve and taking what some of our colleagues have called a victory lap. let's put up the risk radar and on variousere we are asset classes. we've seen reaction aplenty to what we heard from the fed
1:02 am
yesterday. to reiterate what we heard about the dollar, this is the bloomberg u.s. dollars stop index. what a of focusing on stronger u.s. economy does to a global economy, the preoccupation is on what a strong dollar does to some of the corporate and others in emerging markets and focusing on the negatives there. dropped to its lowest since march of 2015. again it is weaker, down by .3%. yield ine u.s. 10 year there, it's unchanged, but it got up to 2.57 there on that chart. it was up by 10 basis points in yesterday's session and its highest since september 2014. the yield has climbed 45 sessions in a row. let's talk about oil briefly, a
1:03 am
big ball on the oil prices cushing is the delivery point for wti with increased -- with inventories increasing it's hard to make up ground despite what opec has been doing. now let's get bloomberg first word news. here is angie lau. and you: technology industry leaders have met with president-elect donald trump. bezos sandberg and jeff sought to persuade him to avoid policies that he thought would hurt their companies. trump insisted that he was an ally of the tech industry. mr. trump: i'm here to help you folks do well, and you are doing well right now, and i'm very honored by the balance. bounce.ed by the angie: australia's economy
1:04 am
recorded its biggest jobs gained this year, more than double estimates. rateigher participation signals a healthy labor market. it validates a central bank forecast that hiring would improve and suggest that policymakers will extend their interest rate pause. new york rather than the european union may be the winner exodus ofexit driven financial services from london. that's the warning today from u.k. lawmakers. a house of lords committee report that unless negotiations are prismatic, jobs could go to wall street. during the last parliamentary hurdle to confirm his position as italian prime minister. he won a vote of confidence in the senate. the upper house voted to back his government following last
1:05 am
week's resignation of his predecessor, matteo renzi. deployingars to be weapons systems on all seven of the reefs it has built in the sub china sea. the asian maritime transparency initiative, the installations call into question a pledge made by china's president not to militarize the disputed islands. day innews 24 hours a more than 120 countries. you can find more stories on the bloomberg. i'm angie lau. this is bloomberg. asianlet's see how the markets are performing right now. juliet has details of everything that is happening. equity markets didn't much like what we heard from the fed yesterday. they didn't like it in the united states or over in asia.
1:06 am
that's true. we've seen most asian markets weaker today although there's been a rebound on the nikkei of .10% but that's all about yen weakness and dollar strength. it's been a case of buy the rumor, sell the facts. janet rett -- janet yellen's hawkish comments of more rate rises. dollarr the hong kong pegged to the u.s. dollar so on the hang seng are not seeing any gains at all. the hang seng one of the worst performers and australia's market close down by .8%. unemployment ticking up to 5.7%. 1.5% buthold at certainly a lot of weakness coming through in those chinese and hong kong stocks. looking at specific stock movements, the biggest tech ipo since 2007 on hong kong today
1:07 am
made for a dismal day. we did see carmakers looking quite good, up 2% on the back of .hat export story anna: juliet with details of what's happening. the latest on fujifilm's efforts melco, announcing the chemical reagent unit. it seems to been confirmed. back to our top story, the federal reserve has raised interest rates for the second time in a decade and forecast a steepening path for borrowing costs in the coming year as inflation expectations continue to rise. talked aboutement
1:08 am
further strengthening in labor market conditions. janet yellen insisted the central bank is not behind the curve. year, 2.20 5ast million net new jobs have been 2.25 million jobs have been created. we expect the economy will continue to perform well. with the job market strengthening further and inflation rising to 2% over the next couple of years. anna: expectation for stiff -- with evening in borrowing costs don't sit well with growth. she questioned the ability to absorb a quick pace of policy tightening. >> i would doubt the ability of the global central bank and the fed to raise interest rates three times a year for the next
1:09 am
several years, because the global economy and even the u.s. higher is relatively leverage, and housing will begin to reflect that. anna: joining us in london is the chief executive at hand mural. mural. mural -- pan she said there was no need for fiscal stimulus and sees further tightening in the labor market ahead. what does that tell us about a yellen-trump combination in the u.s.? it was at best a rough guide for where the policy may head in 2017. i think what was most relevant in all of this was what was not in most fomc assumptions.
1:10 am
put those into three baskets. start off with the tax cuts that have been spoken about, -- will thethe senate support that? we heard from mitch, -- mitch mcconnell that he wanted it to be mutually neutral. did not hear if they believe that $1 trillion stimulus in infrastructure and how it would play out in the economy. we don't know what the , how itry standpoint will play into the fomc's expectations next year. does it mean the fomc will accommodate all this, certainly not in their assumptions because they haven't made any assessment of what the policy environment looks like. one on pulled up a new the bloomberg, it tells you how markets have moved since we got
1:11 am
the decision from the fed. outlier is the bloomberg dollar index. so the dollar the big beneficiary of this. what we've seen in emerging market currencies is despite the fact that the fed is talking about a strong economy, the rest of the world is not picked up on thepositives and saying u.s. economy is strong, that is good. they focus on the negatives of this really strong dollar. >> the reaction on the market was a result of the two rate rises, to the december estimate that has three rate hikes. started the year talking about the divergence between the fed and the rest of the central banks. we are back in the same place at the end of 2016, still talking about that. it's quite notable that the medium estimate was for three rate hikes. the balance of participants you 5-4 in either side was
1:12 am
favor of those expecting a lower policy path. it will act as a softening impact on the u.s. economy. anna: so you're quite dovish compared to the median of the fed and market expectations. >> a lot of the broader market expectations, believing we will get 3.5%-4% growth. i spoke about those three baskets. i'm afraid i'm much more conservative in my outlook in terms of the ability to get some of that headline grabbing policy theiatives that will push u.s. economy to where it is running hot. anna: we heard from bill gross come at talking about the speedy pace of rate hikes that are increasingly speedy, faster than before, as being a signal by the
1:13 am
fed. here is another chart that reminds us, because it's been a long time since we've seen a tightening cycle of the fed -- at the fed. have the 10 year yield and what happens to the s&p. what can we usefully do looking back at the last cycle to look at this one? let's remember the regulatory landscape for financial services particularly in the u.s. economy at that time. 2004-2006 was a time when before dodd-frank, when proprietary trading was commonplace. if you see the level of gearing and financial invasion that characterized that time, then it's quite possible that you such an expansion in the u.s. economy that the fed
1:14 am
needs to aggressively tighten during that period. we live in a very different world. in, you'd expect the lead-in times to be most of 2017 to get that stuff through congress and the senate. therefore i want to see it actually play out before then. anna: simon french stays with us here on the program. coming up, a different kind of spread to worry about. comments on inflation will be closely watched at today's meeting on rates day. eu leader summit in brussels will focus on issues from brexit to russia, and donald trump. theresa may is not invited to the end of year summit. much patience how
1:15 am
-- we look ahead to the central banks rate decision this morning. this is bloomberg. ♪
1:16 am
1:17 am
1:18 am
anna: welcome back, everybody. it's 2:18 if you're watching in hong kong. the hang seng down by 1.9%. we have weakness across asian equity markets as a result of the fed being a little more aggressive in its stock move. let's get the bloomberg business flash. yahoo! fell in extended trade after announcing another security breach. it says an unidentified third-party stole data from a billion users, including more than 100 80,000 u.s. government and military employees. it's of the act could allow foreign intelligence services to identify employees and hacked their personal and work
1:19 am
accounts, posing a threat to national security. to include the refinancing of existing capital from around $2 billion. the move comes as the special the chemically company seeks to focus more on health care. uhe chinese tech company meit is made its trading debut in hong kong. it raised 629 million u.s. dollars in the biggest ipo by technology company in hong kong since alibaba in 2007. the founder and chairman told bloomberg the company has aspirations and social media. >> our focus is to get more exposure and let more people know about our brand. tu a tool fore mei them and later to turn it into a social media at.
1:20 am
despite an earlier report to the contrary, according to people familiar with the matter, nz is not in deal talks. representatives did not immediately respond to a request for comment. after almost two years of waiting, the big day is finally and its firstndo game for smartphones. today's release of super mario for apple devices is the first forecast for what the game maker can achieve. announced lastre year, adding almost $20 billion to its market value. that is your bloomberg business flash. goes global there productivity. now from the fed yesterday, the
1:21 am
central bank a little closer to us here in london. the bank of england decision is today at noon u.k. time. the minutes make it the first insight of their take on the state of fiscal consolidation. what are we expecting? it's not far from one side of the city to another, but a little bit of it technical problem there. we will try to get more in a moment. simon french is still on set with us here in london. let's talk about what the bank of england is going to tell us today. stories all these ite and other things
1:22 am
are pushing up consumer expectations. quarterlysaw expectations last week from the bank of england survey showing a five year high in expectations. that really is the headline -- as the headline start to permeate what to expect post-christmas in terms of the standoff between retailers, suppliers, and consumers. it will be an uncomfortable surprise in the new year where most retailers will pass on the increases. we've seen the consumer price index starting to tip up to 1.2% earlier in the week. bank of england has already said it will look through this currency led inflation. in the history of the bank of england since it became independent, it's tended to only raise interest rates when it seen core inflation generated by the labor market pushing up the
1:23 am
u.k. cpi. how long do you see them doing that for? does it mean they keep up with this neutral stance that seems to be the story from the bank of england of late? simon: i think there is a preference to sit in the middle of what's going on on the other side of the atlantic, but also the ecb is pushing the euro weaker and potentially materially weaker. therefore in that environment, if not coming under large pressure to defend the currency, it seems to have found a flaw against the major currency comparisons. for most ofl see 2017 and 2018, the bank of england sitting tight and awaiting developments about >> it and will undoubtedly defined that path as we get or clarity on the terms. the new narrative we seem
1:24 am
to be getting is not bad news, but it seems to be getting traction, around a description of the u.k. losing its financial services. we've had that kind of narrative and markip hammond carney even touched on it a little bit talking about disruption that will be created on the other side of the channel if there was not a smooth transition. now we have the house of lords report due out today, saying that new york could be the big beneficiary if london loses out. simon: it holds water in the short term because there isn't an obvious european alternative to london. about thes we spoke idea about the situation regarding budget scoring in the u.s., bring it back to a dynamic versus static situation
1:25 am
regarding the financial market in london. you cannot immediately scale up to an alternative and therefore a lot of activity will not leave london. this is why brexit is a slow burn problem. over a decade or two decades, you don't have access to your biggest trading partner. other alternative financial areas in the eurozone will start to build up capacity and incrementally take trade off london. in the short-term, they are it's, but in the long term more negative for the u.k. outside the european union. anna: you need a longer verizon -- longer horizon to see the effects. the labor market got some slightly more negative news this week. simon: there was a small pair areback employment -- p
1:26 am
in employment. with the introduction of the national living wage, private pensions, these are all leading to employers -- they are likely to be like a lot of us, while we have no clarity of what brexit is going to look like, all we know is it means brexit. so were going to carry on broadly as we would do otherwise and look at the hollis environment, the global economy. in the short-term, nothing has changed. anna: it might be hard or soft, clean or dirty. we've heard all those things. simon, thank you so much for staying with us on the program. catch full coverage on the bank of england decision from noon london time. what will governor mark carney and his colleagues conclude on the path ahead? meet,t, the eu leaders
1:27 am
hoping to put her turbulent 2016 behind them. with more trouble ahead next year, how can they prepare? were going live to brussels. this is bloomberg. ♪
1:28 am
1:29 am
1:30 am
anna: welcome back, everybody. tokyo in the afternoon for you, the dollar against the yen. yen weakness helping the japanese equity market, one of the only areas of positivity in the asian equity session generally, because the dollar was one of the big beneficiaries as result of what we had from the fed. and the mood for rates next year. a new edition of daybreak is available on the bloomberg and your mobile. let's look at some of the top stories today. the cover story is in connection with that at going be story and
1:31 am
the road ahead for the fed. beconnection with the fo him fomb story. ther janet yellen called move of confidence in the economy, citing rising inflation and a stronger labor market. more central-bank action or possibly in action. possibly inaction. the particular focus will be on the bank of england minutes. the potential for a slower case of fiscal tightening, according to bloomberg insiders. finally, daybreak focuses on yahoo!, it has been hacked again. it exposed the second major security breach that may have affected one billion users. it has not been able to identify
1:32 am
the institution -- intrusion linked to the fed that took place in 2013. more than one hundred 50,000 government and military employees are among those infected. let's look at what is happening in the markets. let's get up-to-date on the post fed fallout in the markets. up bloomberg dollar index is nearly .10%. that hides the big moves up yesterday, up by 1.1% in yesterday's session, as result of the fed and the stronger dollar. the euro dollar as well, weakness in the euro, down by .3%. the dollar going to the lowest since march of 2015. we have not seen those levels quite some time. u.s. 10 year yield for thed at 2.57
1:33 am
moment. we saw big movement yesterday, the highest since september 2014. that yield has been climbing for five straight sessions, much to think about four bond investors. we have the price of a barrel of crude in there for you, at 50.96, down from those lofty heights earlier this week. let's get to some other news, the retail giant amazon has made its first drawn delivery to an -- first drone delivery to an actual customer. of george jetson meets home drone delivery. the company sent its first package to an actual customer.
1:34 am
it happened on december 7, but were just getting word now in cambridge, about 100 kilometers north of london. one interesting admission from amazon is that even though it is a u.s. company, it did it in the u.k. because it says u.s. regulations are just too strict. the drone did not fly more than 400 feet in the sky and the first customer took delivery of an amazon fire tv and a bag of popcorn. 13 minutes from click to delivery. , amazoner delivery time says in the real-world delivery could be as soon as 30 minutes. cost could fall to about one dollar per delivery, according to a financial research firm. has prime now which call $7.99 for guaranteed delivery within an hour.
1:35 am
it's important to know that drone can claim the first delivery ever. it does have competitors. another made a flight back in july in nevada, the first time a u.s. customer got a delivery by drone. perhaps a properly, they delivered doughnuts and hot coffee. in september there was a delivery by project wing over in virginia. delivered burritos to college students. they are still collecting data to make sure that technology is safe so packages will not be falling from the skies. anna: the things you can get by drone these days. let's hope they arrived in the
1:36 am
state they were intended. we assume the tv was functioning. the last eu summit takes place today in brussels. meeting of 28 members, another informal gathering will discuss brexit without the u.k.'s theresa may of course. simon french is still here with us on daybreak. , buta, the refugee crisis then there is a separate meeting afterward to which the u.k. is not invited. understandably one assumes they want to get their stories straight. simon: the other side of that argument or discussion will be what redlines the u.k. government will present them with. we got a little more clarity on that yesterday from david davis, the brexit and esther here in brexit minister
1:37 am
here in the u.k. ofbably the backend february. be very muchll whether they start to buy the thement that some of perhaps aggressive tariff or are a losingctions scenario, or whether they see things differently because there are many versions of the truth kicking around here at the moment. the more you look at this scenario, you have to look at both sides of negotiation and understand who are not going to ship their positions. fourhe eu is about freedoms, into basel. -- indivisible.
1:38 am
they will just tell the eu what the migration policy will be going forward. anna: they look mutually compatible right now, but if you look at the four freedoms, does it depend how you define those freedoms at all? one of their spokesman has suggested that while they are compromising on those four freedoms, at one point there was an emphasis on for freedom in the four areas, that things could be differently. simon: money will help lubricate that decision because is the u.k. prepared to pay for some element of a more watered-down version of the freedoms that they don't like? we heard again yesterday from david davis that it's on the radar as they've made note
1:39 am
decision on whether they will or will not pay for anything. turkey, migration crisis, i think you start to bring those pressure points and of course the looming elections in the netherlands, france, and germany. you bring those pressure points and what a populist political environment in those countries may yield, you might see them start to look more acceptable to the u.k. decide actually this is not tenable -- anna: we will see who is leading various countries next year. , there is on slightly a chart i will bring up now around the ecb and its balance sheet. white ande ecb in the
1:40 am
their balance sheet is growing at a time when other central banks, not so much. onknow what path the fed is right now and it's not about quantitative easing. how does the ecb navigate what is going to be a difficult political story in 2017? they want the government of europe to do more. simon: is worth going back to the decision the ecb may last week to extend the possibility of the program for another nine months at 60 billion euros a month. i thought it was interesting that they chose nine months in most of the markets talk about six months. nine months takes them to the end of the year but all those political events will have played out and potentially those in italy which are not yet scheduled. therefore it's an opportunity for the new generation of
1:41 am
european leaders to pick up this thatl and structural baton it been hoped for from the governing council. i think they played it quite cleverly and have given a whole years lead in time to effectively lobby for the other policy leaders the opportunity to be in play and establish their position. french,ank you, simon for staying with us on the program. in berne.ive the fed predicts three rate hikes in 2017, but with so much uncertainty, is any forecast valid? and still to come, a different kind of spread to worry about, the rising cost of household products like marmite. what does it mean for the bank of england?
1:42 am
it comes down to inflation. more details on the inflation story and the bank of england rate decision. this is bloomberg. ♪
1:43 am
1:44 am
1:45 am
>> they were dealt the ability of the central bank in the fed to -- they would doubt the ability to raise rates three times the year for the next several years because the global economy and the u.s. economy is relatively highly levered and housing will begin to reflect that. next the risk of the central , two to three, and the fed said three interest rate hikes is on the upside. if there's more of this fiscal stimulus, more growth, more inflation, then we think the fed will be more aggressive.
1:46 am
the issue of policy uncertainty is a big deal. here's where politics does come in. that could be a drag on the economy. really it's going to be very important to see what happens after the inauguration in january. >> they will need to be careful, and the trump proposals, if they get some momentum and you see some movement on a tax cut or an infrastructure program, something like that, is greater than we expected and looks like it might move quicker, then the fed will need to be very attuned to what that might imply for inflation pressures going forward. >> a clear indication that the fed is less willing to keep interest rates artificially low, and the markets are reacting. most of the action has been on the interest rate front and on the currency front. some of our top guests on bloomberg tv following yesterday's fed hike, weighing in with there's all caps -- with their thoughts.
1:47 am
it's 1:46 if you're watching in new york. london and 7:46 in paris or berlin. let's get the bloomberg business flash. a deal for $5.5 billion includes the refinancing of existing capital of around $2 billion. comes as they seek to focus more on health care. fujifilm has agreed to by a for $1.7 billion. the purchase further strengthens fujifilm's foothold in the health care industry. once best known for making camera film, the company has diversified into new areas including health care devices, medicines, and copy machines.
1:48 am
young you fell in extended trading after announcing another security breach. it says an unidentified word party stole data from a billion users, including 150 thousand u.s. government and military employees. the leak could allow foreign in -- intelligence services to identify and toys and hack the personal and work accounts, posing a threat to national security. the chinese tech company meitu raised $629 billion u.s. in the biggest ipo biotechnology company in hong kong since company in hong kong since alibaba in 2007. the chairman and founder's -- says the company has aspirations in social media. to make it a tool and later turn it into a social media at. heinz is not in talks
1:49 am
, after a report that a takeover was reading planned. a spokesman declined to comment and representatives did not immediately respond to our request for comment. after almost three years of waiting, the big day finally here for nintendo and its first game for smartphones. is the firstse forecast of what the japanese can expect. it announced the strategic shift in march last year, adding almost $20 billion to nintendo's market value. that is your bloomberg business flash. let's get more central-bank action in just a couple of hours time.
1:50 am
a rate decision from the swiss national bank comes ahead of the 2017 that is shaping up to be a year heightened uncertainty. berne this is in morning. of political uncertainty for the swiss to deal with. matt: that is right, on the one hand the fed and other central banks that are beginning to normalize policy, it takes the pressure off the swiss national bank to have to go even more negative. on the other hand, the that mario draghi talked about last weekend that he said prevails everywhere makes it a little bit hazardous for the snb. amidst this uncertainty, investors always seek safe havens, and they look to the yen for that traditionally and the swiss franc. driving up the swiss franc has been a problem.
1:51 am
it has already been considered by the president of the snb to be significantly overvalued. those are his words, not mine. kind of aeds to do is balancing act. on the one hand, he doesn't want to cut rates even more negative. the snb is worried about a real estate asset bubble, for example. people needs to keep from coming into the swiss franc as a safe haven, and he knows he can go as low as -1.25% before people start hoarding cash. -75 basis points. let's talk about the fed and yesterday the effect of what they said and what they're doing in the rate hike and what impact it has on the currency. thing thomas horton has said recently is that they have an interest in policy globally, moving towards normalization.
1:52 am
matt: absolutely. you saw what happened with the dollar against the yen. really astounding moves, astounding strength case of the fed increase in the upper pressure, now expecting three rate hikes next year. i will talk to the swiss bank president and i will ask him if dollar trump is making his job a little bit easier. much, matt you so miller. snbill be talking to the president at 10:50 u.k. time this morning. simon french is still with us in the studio. very mindful of the political risk that lies ahead for the swiss and the currency next year. simon: what the differential
1:53 am
between u.s. policy rates and swiss policy rates does for the material.ugely swiss could get more bang for the buck. they don't need to intervene quite as much in the currency markets. the problem for thomas jordan is , the real challenge for swiss exports comes from the weakness of the euro. whorly it is mario draghi can do more favors for thomas jordan than janet yellen can. anna: is there any sign that the role of the swiss franc as a safe haven currency is low in times of crisis? risk comespolitical closer to the borders in france and with germany and not so much
1:54 am
with the netherlands. , this putsty of this the swiss national bank in a position where they might have interventions. matt mentioned concerns over a real estate bubble. free capital movement has been the cornerstone of swiss national finance with banking. it becomes febrile again in 2017, whether they have to give into that toolkit. anna: more from the snb later. about thelking reaction in currency markets to the fed yesterday. relevant to the snb conversation and also to the chinese conversation. this is the chinese currency first against the dollar and also against a bloomberg replica
1:55 am
of a trade weighted basket of currencies. measures did very different things. give us your thoughts on where the chinese currency story goes. simon: the most focus is on the u.s. dollar cross rate. it will be symbolically touching that seven that a lot of people talk about back in august 2015 when the yuan was initially devalued. the chinese authorities would argue and will argue if they are labeled a currency manipulator that it's more appropriate to look at the measure of strength against all baskets of the sbr and against sterling, against the yen, against the euro, it has been much more resilient. they can make the case that they've held up their side of the bargain in not manipulating their currency materially weaker
1:56 am
for export. it's much more nuanced, clearly a strong dollar is difficult for the chinese corporate sector. it will be a drag on activity. colleague at bloomberg intelligence was making the point, they're probably trying to weaken the currency. directed entirely at preventing sharper declines in the currency but there's a lot we don't yet know. : looking at reserves moving down to $3.2 trillion, all designed to manage that depreciation. of course the risk scenario for donald trump and congress if they take an aggressive half on the currency with china, chinese authorities within their rights to step back and see how a movement further would impact
1:57 am
trade. anna: simon, thanks for joining us. up next, we talk more about the fed. they predict three rate hikes in 2017. this is bloomberg. ♪
1:58 am
1:59 am
2:00 am
see: the officials now increases in 2017. >> the economy has proven to be markedly resilient so it is a vote of confidence in the economy. inflation takes center stage at the bank of england. rates are not expected to change but what will the minutes tell us about the road ahead? and eu leaders meet in brussels today at the end of a dramatic year but with brexit, russia, we refugees on the agenda, could see 2017 be even worse.
2:01 am
a very warm welcome to ." ourberg daybreak europe flagship morning show. european november car sales rising by 5.6% to 1.1 9 million vehicles. its firstosting european market share gain since the crisis. the numbers growing at 6.3%, outpacing the broader market. it seems may be signs that the german manufacturer is regaining some consumer trust. it is the region's biggest automaker accounting for 24.8 percent of car sales in november compared to 24.6% one year earlier. the sector as a whole is on track for its third annual
2:02 am
growth as we get to the third annual gain, as we get toward the end of the bpa. sales have been recovering hitting a two decade low. improved sick -- consumer confidence and economic wrote helping here. not all the headaches -- --ulators are investing on investigating on whether porsche manipulative data and in the u.k. they are facing a lawsuit as well. potential headaches to come. the data looks for -- better for bw. we had a nice session in asia. o and thatghter pace was the message from the fed. on theasian equities back. be a touchcted to weaker across european equity markets but things could be more mixed. down i .03 of 8%.
2:03 am
beenll show you what has moving since the fed decision. it was a big move in markets. the beneficiary is the dollar. the bloomberg dollar index of five 1.1% on wednesday. we have the euro weaker against the dollar. it continues to be the story 1.05.elow the u.s. 10 year yield at 2.58%. yesterday's session we saw the yield increasing by 10 basis points. it went up to its highest level since september of 2014, the yields have been rising for five sessions, a little bit of [inaudible] on the oil story. there is the dollar story in here undoubtedly but we are down from those lofty heights we saw at the start of this week. that was around the opec story. the story in the middle of the week has more -- been more about
2:04 am
inventory in the u.s. and the world is experiencing that increasing inventory picture. let's get the bloomberg/news for you. leaders have met with president elect donald trump. anduding she ryne sandberg jeff bezos sought to persuade him to avoid policies they believed would hurt their companies. trump insisted he was an ally of the tech industry. mr. trump: i am here to help you folks do well. and doing well right now and i am very honored by the bounce. everyone has to like me at least a little bit. anna: australia's economy recorded its biggest job gain. added,an 39,000 jobs more than double estimates. growth was led by full-time positions for the hype for dissipation rate signaling a healthy labor market. and the forecast that hiring improve with -- in the coming
2:05 am
months. suggesting that policy makers would extend their interest rates. new york rather than the eu may be the winner from any brexit driven exit. that is warning from u.k. lawmakers. a house of lords eu committee report says unless negotiators .n both sides got command -- pragmatic, jobs could go to wall street rather than paris or frankfurt. behind -- far behind london. all according to the house of lords report. more from that on bloomberg radio. global news 24 hours a day powered by more than 26 hundred journalists and analysts in more than 120 countries. you can find all stories on the bloomberg at top . let's check out the latest action. we have seen quite staggering reaction in equity markets and foreign markets. we heard from the fed and that move from two to three. juliette: janet yellen a lot
2:06 am
more hawkish than people were looking for. we did see pickup coming from consumer goods in asia but generally, a selloff on oil and gas as you would expect coming under pressure almost 2% in nearly every sector selling off. dollar strength meant yen weakness. we did see some good gains in japan. and thex at highs brunt of the selling in hong kong. lso increasing its rate today as well. banks, insurers being under pressure in the hong kong session, the hang seng -- hang seng down 1.7 and shanghai closing weaker by .7 of 1%. also a weakness coming through in the australian market, picking up to 5.7%. the only real winner out of this today was the dollar. a lot of currency coming under
2:07 am
pressure. dollar-yen down by .41%. the yen 117 white six and the korean won falling the most in a month down .7 of 1%. a weakness -- a lot of weakness coming from these em currencies. anna: thank you. let's get to one of our top corporate stories. it includes debt. specialtybuyer and chemicals company seeks to focus more on health care. we are joined on the line from basel by the ceo. great to have you on the program. thank you for joining us on what is undoubtedly a busy day. give us your thoughts on this rotation with the move, this push we're seeing further into health care. how far through that are you, how much further does that move have to go?
2:08 am
latest strategy, future investments will go [inaudible] this acquisition is almost a perfect fit to strengthen us in our strategy to invest more in the health care continuum. anna: give us more detail on the rationale for this move because we see other companies going further into the health care space. how much further can your business push into this area? i know you are betting the drug companies will outsource more of their manufacturing. how much further can the push go? richard: what we do with this acquisition, we are now and and solution provider for [inaudible] substance delivery which is the active ingredient [inaudible] markethave a
2:09 am
acceleration. especially with a new drug coming in to the market. we definitely have competitive advantage after closing the transaction. anna: do think the buildup of the chemicals portfolio in lots far, ornza went too will you be selling more of the chemicals business? richard: we are continuing at valley in the remaining businesses that we did acquisition two thirds of lonza. it is definitely the strongest investment we have going forward. anna: the central bank and switzerland is meeting later on today. the s&p -- snb meets. there are events that could push the swiss franc higher. what do you want from the central bank? central bank is
2:10 am
always good for the prices we learn two years ago but we are definitely, we are naturally [inaudible] over the region. it has even strengthened with the acquisition after closing. that is why i am thinking in the preparedwe are well for all if eventualities that should come out of it. to keep thethe swiss franc under control? richard: it is out of our companies. snb we keepp if the the frank under control. anna: thank you for joining us. the lonza ceo joining us from basel. our top story to which is the fed. the federal reserve has raised rates for the second time in a decade.
2:11 am
inflation expectations continue to rise. the fomc statement said the monetary policy supported further strengthening in the market conditions. fed chair janet yellen called the hike a vote of confidence in the economy insisting the central bank is not behind the curve. she said objectives were inside area ms. yellen: over the past new jobs million net have been created. unemployment has fallen further. inflation has moved closer to two hour longer run goal of 2%. we expect the economy will continue to perform well, with the job market strengthening further, and inflation rising to 2% over the next couple of years. swissexpectations for [inaudible] and borrowing costs do not sit well. he questioned the ability of the u.s. economy to observe the quick pace of policy tightening. >> i would doubt the ability of
2:12 am
the central bank and a global central bank to raise interest rates three times a year for the next several years because the global economy and even the u.s. economy is relatively highly levered and housing will begin to reflect that. anna: let's get the thoughts of the investment director at london capital. a thing or two to say about the fed, no doubt. very good morning to you. fomc optionthe dmm that shows how markets have reacted since we heard from the -- and it was the increased was not the increased interest rates. we see fx markets and bond markets from what we have heard from the fed. three hate -- rate hikes. what is your assessment? guest: we will get 34 number of reasons. the economy has done quite well.
2:13 am
a 2%tion is picking up at target. it is a matter of time before the fed's goals are achieved. on top of that, there is the physical stimulate of policies. it is that that is driving the market reaction in terms of where the bond yields are going and the interest rates are climbing shortly. --sharply. go further.tinue to this is what is behind the selloff that we are seeing right now. as the chair yellen said yesterday about the fiscal policies are needed for the economy to get to its optimum phase. economy will get superheated and investors will go further in the market. anna: a lot depends on whether donald trump and his team want financialr steady
2:14 am
[inaudible] the earnings expectations have been built in for 2017 and 18. it indicates fairly large stimulus coming through and that can only lead one to one conclusion which is the economy will get quite hot in terms of inflation continuing to rise and employment is at the higher level, the optimal level and that results in [inaudible] and kicking back to the inflation rate. curve. in line with the it is easy to fall behind of inflation picks up if trumps policies are more aggressive. the: what does this do to dollar? these track what the dollar index did. every time this year it has
2:15 am
fallen apart from around yesterday's announcement. we see a move higher in the dollar and quite a stunning move in the dollar. guest: one of the most surprising things about yesterday's fomc meeting and the release and the discussion was there was no mention of the implicit tightening that is taking place because the dollar has been rising since trump was elected. yields have been going up. there is a significant tightening coming into the economy from two different sources, the yield curve and the dollar. i think that the dollar at the moment has everything going behind it as inflation expectations begin to pick up. that will continue to drive the dollar and i think that we have not seen the end of the dollar strength yet. anna: the u.s. story is very
2:16 am
disconnected from the rest of the world. a couple of years ago we were looking at fomc statements that were littered with commentary about weakness in other parts of the world and concern about chineseconomy and the economy or elsewhere. what is it going to be in 2017 that puts the fed off its path, is it china, european politics? guest: what we have got is the diversions of the monetary policies will get even more accentuated. the yield curve and the ecb doing a lot more longer-term. and the bank of england. that means that you have got some of the central bankers want to bring the interest rate down and the u.s. economy and interest-rate going up. this is a recipe for a lot more volatility to come into the financial markets next year. the principal source of volatility will be the exchange yields. the
2:17 am
the volatility we have seen in the last 12 months will fall into [inaudible] we will see much bigger moves coming through. moreolicy will have a lot [indiscernible] on the energy and commodity spectrum as well and those currencies will again be very volatile. anna: thank you for your thoughts so far this morning. on the program. it is 7:17 a.m. in london and 3:17 p.m. in hong kong. that is where we find juliette saly. onzo group has .greed to find -- by capsugel the move comes as the swiss oner seeks to focus more health care. yahoo! fell in extended trading after announcing another
2:18 am
security breach. an unidentified third party stole data from one billion users including 150,000 u.s. government and military employees. it is a leak that could allow foreign intelligence services to identify employees and hack their personal and work accounts posing a threat to national security. fujifilm has agreed to buy him a store -- a majority stake in meitu chemicals. strengthening fujifilm's stakehole stakehole in health care. meitu has made its trade debut in hong kong. the mobile and selfie developer $69written it -- raised billion. their founder and chairman told lumbered the company has aspirations in social media.
2:19 am
>> our focus now is to get more exposure and let more people know about our brand. tool for make meitu a them and turn it into a social media app. juliette: after almost two years of waiting, the big day is finally here for nintendo and its first game for smartphones. today's super mario run for achievements is the after staying out of the thriving mobile app market. announcedns as they there'd strategic shift almost -- adding almost funny billion dollars to its market value. the wait is over. that is your bloomberg business flash. anna: there goes global productivity. saly joining us from hong kong. bank of england decision is due today at noon. the minutes may also give the insight as they take on
2:20 am
[indiscernible] joining us now. and aank of england began lot has changed in the meantime. >> it has indeed. the expectation is the policy will be kept on hold by the bank of england today. both in terms of the benchmark rate and -- at 0.25% but also the asset purchase target at 435 billion parts -- pounds of gilt and corporate debt. toy are expected to vote keep the policy and hold but also to confirm its neutral stance which was mentioned at the last meeting in november and there was a shift from that easing where mark carney said the bank would -- was less willing to tolerate above target
2:21 am
inflation. what fueled those expectations is the weaker sterling since brexit. what the bank of england has is what you might call a brexit balancing act. on the one hand, it needs to support growth and on the other, it has to control inflation and we had that dilemma highlighted i some of the data that we had out this week with employment dropping for the first time in more than a year. where as inflation in november accelerated to its highest in more than two years. haverms of sterling we seen a bit of a rebound in that since the last meeting of 6.5%. anna: with inflation a big topic of conversation and reaction, what can we expect beyond today's statement? >> we are expecting to hear a little bit more about that in for very. in terms of reference to that -- fiscalooser risk policy.
2:22 am
the big question will be what is the risk of the boe tightening policy if we do see a downturn in growth particularly once article 50 is triggered but interestingly, more than two thirds of economists see a rate hike rather than a cut as the next move and we did see that repricing and markets after the last meeting as well. with that said, they do not expect any move for quite a while, not until the -- until 2019. anna: thank you. you can catch full coverage of the london bank decision at noon. .iy ca let's talk about the u.k.. u.k. inflation is seen accelerating.
2:23 am
expectations around inflation are rising, aren't they, in the u.k.? thel: we are going to get [indiscernible] between one and 1.2%. inflation rate in 2017 is going 2.75 and 3% before coming back down under 2% toward the end of 2018. so still in that sense, it is a past truth. it shouldoff so dissipate itself in time. i think if the bank of england really response to the temporary rise in inflation that would end up adding a policy mistake. but the expectation initially was that the economy was going to go significantly slower than it transpired. it means that the policy action taking place in all -- august
2:24 am
and onwards has been very retrospect when you look at the outcome that has come since then. anna: they do not make policy in a vacuum. chart, 4220.er this is the u.s.-u.k. spread. it is at a 25 year high. the u.k. plow its own path even if that is a neutral one sitting in between the u.s. and the ecb? implicit have seen tightening in the u.k. because the exchange rate has recovered a little bit in the last few weeks. the 10 year bond yields have also gone up. to that extent, that is already something happening to slow the economy a little bit. but the quantity -- quantitative easing program is still quite a huge, the corporate buying program will run until sometime and we had an interest rate cut. we have a lot of stimulating
2:25 am
policies running. i think that given the uncertainty that we have around brexit, it is difficult to see the bank of england doing very much for some time. it is unlikely to want to tighten the qe program right here and now. in that sense, i think the exchange rate will do whatever it has to do for now. anna: be a shocking server perhaps. let's talk about asset management. expect in global equity markets and a time when thefed is hiking, even in last tightening cycle we saw the s&p rising. we are very near record levels, are we? the market has been quite reckless. the banking sector has been under tremendous pressure but
2:26 am
looking forward to the shape of the air and the recovery in the commodity market, the market expectations for earnings have improved significantly. depressor interests compress the market multiples a little bit but the earnings growth will be enough to compensate for that for now. i think we should expect mid-single digits to hire single digits rates from the most large equity markets in the world. there's anything to go for. consumer spending is improvement. anna: it is a long equity cycle. you look at the last eight or nine economic cycles, everything has been around seven or eight years, and the longest is 10 years. this one will be younger than 10 years given what is happening around the world with the fiscal expansion coming. the cycle get expanded a little
2:27 am
bit further. anna: thank you for your time. "daybreak for europe." we will be a touch weaker at the start of trade. ♪
2:28 am
2:29 am
i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. ways wins. especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second.
2:30 am
you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. guy: welcome to bloomberg markets. this is the european open. your first trade of the day coming up. where is matt miller today? matt miller is up in very cold this morning. interesting interviews coming up there. let's talk about that briefings for the day. it is all about the fed. and the dots we trust. , does ital tightening turn into an avalanche in 2017?

43 Views

info Stream Only

Uploaded by TV Archive on